Question

In the cost approach, an opinion of value is developed by adding the

a. depreciation cost new of improvements to depreciated site value
b. depreciated cost new of improvements to estimated site value
c. new cost of the improvements to the depreciated site value
d. new cost of the improvements to the estimated site value.

Answer 1

In the cost approach of property valuation, value is developed by adding the depreciated cost new of improvements to the estimated site value.

Step-by-step explanation:

In the cost approach method of property valuation, a value is developed by summing the depreciated cost of the property improvements with the land or site value. This question essentially asks which components are added together to arrive at the property's total value using the cost approach. The correct formula, as part of cost approach valuation, involves adding the depreciated cost of improvements and the estimated site value. This reflects the idea that the value is derived by taking the cost of constructing a new improvement on the property, reducing it for any form of depreciation that reflects its current condition, and then adding the untouched value of the land.